International Energy Efficiency Transformer Conference 2012

Session 2: Promoting Efficient Transformers by Utilities & Industries strategies and case studies

Amorphous Metal Distribution Transformer Promotion in America and the EU

Europe: Methodology of promotion: The 5 Steps United States: Addressing Regulatory Barriers

What is AMORPHOUS METAL Transformer Core Material?

 According to US Department of Energy, Between Hitachi Metals/Metglas and AT&M, Amorphous Metal (AM) Has ~ 4% Global Supply For Electrical Steel Market Amorphous Metal has lowest no-load losses of any electrical steel There are > 2.5 million Amorphous Metals Distribution Transformers (AMDTs) in Service Worldwide

Why AM Has Low NLL

Why Use Amorphous Metal for Transformers?

Hysteresis Loss No Load Losses

Random molecular structure of amorphous metal causes less friction than SiFe when a magnetic field is applied. This unique property which allows ease of magnetization & demagnetization significantly lowers hysteresis losses in amorphous metals.

Eddy Current Loss

Amorphous metals have very thin laminations (25 micron). Thin laminations result in lower eddy current losses as compared to SiFe.

No-Load Loss (NLL) Versus CRGO

Core Loss Comparison

Transformer Rating (3 phase, 11kV) 25 kVA 40 kVA 63 kVA 100 kVA 250 kVA 630 kVA 1,000 kVA 1,600 kVA 2,500 kVA Typical Core Loss CRGO (M4) 100 140 180 260 520 1,000 1,800 2,100 2,700 Typical Core Loss Amorphous 28 39 50 66 150 280 350 490 550 Loss Reduction w / Amorphous 72% 72% 72% 75% 71% 77% 81% 77% 80%

Amorphous Metal Allows for 60% - 80% Lower No-Load Losses than Other Electrical Steels

CO2 Reduction With AMDTs

IMPACT ON CO2 GAS GENERATION (250 kVA)

(China Example)

China Standard S9 S11 S13 S15 S16

Tons of CO2 Emissions ( 40% Load; 28 Year Life ) 224 190 172 134 128

Versus S11 34 (18) (56) (62)

AMDTs

Amorphous Metal Transformers Reduce CO2 Emissions: Critical Promotional Point for Environmentally Conscious Governments and Utilities

Market Development

Strategy for Promotion of Electrical Steel for Efficient Transformers

Harder: Work with stakeholders in markets that have not yet focused efficient electricity distribution to highlight its social and economic benefits (Pull-Through) Utilities Regulators Government Agencies Advocates for the Environment Local Transformer Manufacturers (Often the Last Group to Engage) Easier: Actively promote in markets that already value the environmental and economic benefits of efficient electricity distribution (Push-Through) Valuation of benefits can be evident in either Government Policy (Regulation/Incentives) or Individual Utility policy (e.g. use of Total Ownership Cost (TOC)) Promotion can jump immediately to Transformer Manufacturers Must still carefully monitor Government Policy trends and engage as necessary Market Development for High Grades of Electrical Steel Often Takes Effort Beyond Typical Commodity Selling

Developing Market for High Efficiency Amorphous Metal-Based Distribution Transformers In the EU Methodology: The 5 Steps

Challenges to Enter Europe Market

Stacked Core Technology Dominates Market No EU Efficiency Regulation; CENELEC spec separates Load (LL) and NoLoad (NLL) Losses and Amorphous is about 50% of lowest NLL (A0) in CENELEC Table (There is no equivalent to Chinas S15) Limited Experience with Amorphous Metal Only One Global Supplier of Amorphous Metal

Stacked Core Amorphous Wound Core

Challenge for All Markets: Modest Capital Investment Required to Begin AMDT Production

Harder Category: Europe Market Development Challenges are Significant

Challenges to Enter Europe Market

Stacked Core Technology Dominates Market No EU Efficiency Regulation; CENELEC spec separates Load (LL) and NoLoad (NLL) Losses and Amorphous is about 50% of lowest NLL (A0) in CENELEC Table (There is no equivalent to Chinas S15) Very Limited Experience with Amorphous Metal Only One Global Supplier of Amorphous Metal

Stacked Core Amorphous Wound Core

Sole Source Barrier is No Longer in Place

Methodology to Enter Europe Market

Step 1: Create Awareness of Opportunities to increase efficiency using AMDTs

Step 2: Work with Utilities to Initiate Amorphous Transformer Evaluations

Step 3: Teach Transformer Makers to Make AMDTs as Cost Effectively as Possible Step 4: Actively Participate in Regulation-Setting Initiatives (Government(s)) Step 5: Actively Participate in Standards-Setting Activity (Industry Associations)

Working with Many Stakeholders is Required; Of Course Some Steps can be Worked in Parallel

STEP 1 (EU) SEEDT

Step 1: Awareness (of Opportunities to increase energy efficiency using AMDTs) Joined SEEDT meetings as an advisor in 2005/2006 to explain amorphous metal value and dispel many myths (SEEDT (Strategies for development and diffusion of Energy Efficient Distribution Transformers) was a project under Intelligent Energy Europe program) Provide input for SEEDT Guide first Published in June 2008

Metglas Appreciates the Kind Invitation from SEEDT Partners to Assist in their Valuable Effort

STEP 2 (EU)

Step 2: Work with Utilities to Initiate Amorphous Transformer Evaluations Between 2008 and 2011, Metglas / Hitachi Metals Europe initiated AMDT evaluations with more than ten (10) EU utilities EDFs R&D Subsidiary, ERDF, quickly recognized value of efficient transformers and presented a paper at the CIRED workshop in June 2010

RWE (major German Utility) also studied efficient transformers produced utilizing low core-loss amorphous metal and published a paper in 2010

Utilities Always See and Understand the Value of Efficient Distribution; Programs Can Take Some Time

STEP 2 - Getting Their Attention

IMPACT ON CO2 GAS GENERATION (400 kVA)

(EU Example)

Tonnes CO2 Emitted Over Lifetime vs. RMS Load

Tonnes CO2 Emitted Over Lifetime

600 500 400 300 200 100 0 0% 20% 40% 60% 80% 100%
400 kVA 28 Year Life

Ck Eo Ck AM

Percentage RMS Load

Assumptions 100% Load Losses No Load Losses Kg CO2 / kWhr. 0.4 Transformer Ck AM 4600 190

Ck Eo 4600 930

According to SEEDT, Ck Eo is Average of EU Installed Base

(From International Institute for Energy Conservation (IIEC))

Amorphous Metal 400 kVA Transformer Reduces CO2 by 73 Metric Tons Over 28 Years

STEP 2 - ERDF Identifies Opportunity

Energy efficiency is set to be one of European industrys major challenges. The European Commissions
2005 Green Paper identified various major actions to be conducted in various sectors. In the electricity supply activity, the Commission is primarily encouraging electricity distributors to innovate in order to reduce their technical losses generated in the networks [2].

distribution transformers account for the majority of losses in electrical European networks with total losses of about 33 TWh/y [3] in the EU27 and 4 TWh/y in the French distribution grid. [1]
For electrical companies distribution transformers are pinpointed as equipment to be improved. Where conventional Grain Oriented steel seems to show a limitation in the possibility of no-load losses reduction, amorphous ribbon technology developed by Hitachi Metals/ Metglas Inc., allows a significant reduction of these losses of wound core transformers [1]

[1] C. ELLEAU and M. MOUHAMAD (EDF), O. GENIN and B. JARRY (ERDF) AMORPHOUS MATERIALS AND ENERGY EFFICIENT DISTRIBUTION TRANSFORMERS CIRED, Workshop, Paper 0031, Lyon, June 2010

[2] B. Jarry and P. Lauzevis (ERDF), P. Lagache and M. Sacotte (France Transfo), AMORPHOUS SHEET CORE TRANSFORMERS UNDER EXPERIMENTATION ON THE ERDF NETWORK, CIRED, 20th International Conference on Electricity Distribution, paper 0090, p.1, Prague, June 2009

[3] R. Targosz, F. Topalis and W. Irrek, Selecting Energy-Efficient Distribution Transformers: A Guide for Achieving Least-Cost Solutions, SEEDT Project (2008)

ERDF, Encouraged by EC, Identifies Opportunities for Loss Reduction using Efficient Distribution Transformers

STEP 2 - Getting AMDTs on the Grid

In 2010, ERDF asked transformers manufacturers to develop prototypes complying with the current transformers specification. Dimensions and weight criteria shall be respected and stay similar to those of conventional transformers already approved. As for conventional transformers, ERDF wishes the next AMDT to withstand short-circuit attempts in accordance with IEC 60076-5. The sound power level stays similar to that of the last generation of transformers already approved. The major change is the no-load losses level which will be based on EN 50464-1 and will not exceed A0/2 [1] . [One EU distribution transformer manufacturer] has built 2 x 400kVA 20KV/410V prototypes to comply with ERDF specifications in preparation for the industrial manufacture of amorphous sheet distribution transformers. These 2 devices passed all the tests required of them. The maximum recorded short-circuit voltage variation during the bolted short-circuit test was 1.9 % on one transformer column [2] .
5 x 400 kVA 20KV/400V and 195 watt no-load loss transformers have been built and installed on the ERDF network [2] . ERDF plans a trial test with some amorphous-core 3-phase transformer prototypes, 250 and 400 kVA, built early in 2010 by the manufacturers who invested in this technology. Dedicated specification for AMDT will be produced soon .. before launching an AMDT supply contract in the French territory. These long terms investments match the commitments of EDF Group in grid losses reduction, according to the European requirements on energy efficiency and energy savings. [1]

[1] C. ELLEAU and M. MOUHAMAD (EDF), O. GENIN and B. JARRY (EDRF) AMORPHOUS MATERIALS AND ENERGY EFFICIENT DISTRIBUTION TRANSFORMERS CIRED, Workshop, Paper 0031, Lyon, June 2010

[2] B. Jarry, P. Lauzevis, P. Lagache and M. Sacotte, AMORPHOUS SHEET CORE TRANSFORMERS UNDER EXPERIMENTATION ON THE ERDF NETWORK, CIRED, 20th International Conference on Electricity Distribution, paper 0090, p.1, Prague, June 2009

ERDF Evaluation of AMDTs has been a Success

STEP 2 - RWE Realizes Benefits [1]

Although the average efficiency of existing DTs on the grid is 98,5% the losses for the German distribution grid are 4.000 GWh/year, transformer losses contribution is 60%, this represents the energy needs of 1,000,000 households Decentralized feed in coming from 6,000 new sites of renewables energies (wind, solar, biogas) have increased by 100 MW installed power generation in 2009 on RWE Rhein-Ruhr Verteilnetzs grid only Target is a 65% reduction of NNl compared to the actual figures, RWE Rheinland-Westfalen Netz AG has initiated a field test for AMDTs with the transformer maker SGB. Prototypes (250 kVA) showed the following main characteristics NLL were 63% lower than conventional DTs (AoBk) Max. short circuit impedance change is1.3%- even with rectangular coil geometry Audible sound between 44 and 49 dB(A) For a conventional 250-kVA DT (AoBk) the yearly losses are 3.100 kWh or 1,7 % of the feed in solar power. By using AMDTs the annual losses are reduced by over 50% to 1.500 kWh. CO2 emission savings can be calculated at 0,9 MT/AMDT/year.

Based on todays cost assumptions AMDTs show an advantage of approx. 2000 over a conventional DT (AoBk).
[1] Translated excerpts from EW-Aufsatz 25/2010 Herstellung und Netzerprobung von verlustarmen Transformatoren in neuer Technologie Von Thomas Christ (RWE), Wesel und Michel Heinz (SGB), Neumark

RWE Study Determines that AMDTs Provide Significant Environmental and Economic Benefits

STEP 3 Now that Utilities are Interested..

Step 3: Teach Transformer Manufacturers to Make AMDTs as Cost Effectively as Possible

Metglas/Hitachi Metals provides:

Specifications of Capital Equipment AMDT Core and Core/Coil Assembly Initial Design Assistance AMDT Core Manufacturing Process Technology On-Site Start-up Assistance and Continuing Support

Technology Transfer to Required to Make it As Easy as Possible to Start AMDT Manufacturing

STEP 4 (EU) - Ecodesign

Step 4: Actively Participate in Regulation-Setting Initiatives

MINUTES CONSULTATION FORUM: Ecodesign ENTR Lot 2 TRANSFORMERS Brussels, 20 April 2012

1.

Attendees/ Presentation

The list of attendees to the meeting and the Commissions presentation are available in circa as separate documents.

2.

Introductions

Kirsi Ekroth-Manssila (KEM), acting Head of Unit, ENTR B.1, welcomed the Consultation Forum members and invitees to the meeting, and introduced the responsible Policy Officer for ENTR Lot 2, Cesar Santos Gil (CSG), and attending colleague, Michael Bennett (MJB).

Participation in EcoDesigns Consultation Forum Ensures Current and Correct Information is Available to Enable Best Decision by EU

STEP 4 Global Effort

Step 4: Actively Participate in Regulation-Setting Initiatives

Europe

India

United States
MINUTES CONSULTATION FORUM: Ecodesign ENTR Lot 2 TRANSFORMERS Brussels, 20 April 2012

1.

Attendees/ Presentation

The list of attendees to the meeting and the Commissions presentation are available in circa as separate documents.

2.

Introductions

Kirsi Ekroth-Manssila (KEM), acting Head of Unit, ENTR B.1, welcomed the Consultation Forum members and invitees to the meeting, and introduced the responsible Policy Officer for ENTR Lot 2, Cesar Santos Gil (CSG), and attending colleague, Michael Bennett (MJB).

Metglas and Hitachi Metals Participate in Such Activity Worldwide

STEP 5 (EU) - Standards

Step 5: Actively Participate in Standards-Setting Activity

CENELEC Mandate and Regulation

First meeting held on 3rd July, 2012 Proposal was to add 2 classes: Ao-20% and Ao/2 A0/2 is similar to S15 in China

CENELEC to Include No Load Losses (NLL) of Amorphous (A0/2), but Since Silicon Steel Cannot Today Achieve A0/2, This Will be AMDT Only

STEP 5 - Global IEC Standard

Step 5: Actively Participate in Standards-Setting Activity

IEC is Also Working on a Global Energy Efficiency Standard

STEP 5 MEPS vs Fixed Loss

Europe ( Cenelec) Losses Designations
kVA

No Load Load Losses (W) Losses (W) A0 90 145 210 300 360 430 510 600 560 650 770 950 1200 1450 1750 Bk 875 1475 2000 2750 3250 3850 4600 5400 5600 7000 9000 11000 14000 18000 22000 Ck 1100 1750 2350 3250 3900 4600 5500 6500 6750 8400 10500 13500 17000 21000 26500

50% Load MEPS CRGO

50% Load MEPS - AMDT (NLL, at worst, are only 45% of Celelec NLL Designation; for 400 kVA, we cannot design to Cenelec 430 W NLL Spec - AMDT NLL are about 195 W) 45% A0; Bk 98.97% 99.14% 99.26% 99.35% 99.39% 99.43% 99.45% 99.49% 99.48% 99.49% 99.48% 99.49% 99.50% 99.49% 99.50% 45% A0; Ck 98.75% 99.00% 99.15% 99.25% 99.28% 99.33% 99.36% 99.40% 99.39% 99.41% 99.41% 99.40% 99.40% 99.41% 99.41%

MEPS: Minimum Energy Performance Standard

50 100 160 250 315 400 500 630 630 800 1000 1250 1600 2000 2500

A0; Bk 98.78% 98.98% 99.12% 99.22% 99.26% 99.31% 99.34% 99.38% 99.38% 99.40% 99.40% 99.41% 99.42% 99.41% 99.42%

A0; Ck 98.56% 98.85% 99.01% 99.12% 99.16% 99.22% 99.25% 99.30% 99.29% 99.32% 99.33% 99.31% 99.32% 99.33% 99.33%

MEPS Should be Set at Average Load Factor 50% is too high for EU and US If Load Factor is Not Set Properly, (1) less energy is actually saved and/or (2) costs are higher TOC Ensures Proper Load Factor

Example: Utility Wants to buy 400 kVA AoBk CRGO unit is 99.31% Efficient at 50% Load for AoBk; AMDT must be 99.43% Efficient at 50% Load and at Bk LL due to lower NLL (45% Ao); However, They Compete on 1st Cost only ( if TOC is not also applied ) So AMDT is more efficient and has lower operating costs but gets no Credit for it

Fixed Loss Standards (Separate LL and NLL) Do Not Allow AMDTs and CRGO DTs to Compete on Level Playing Field

Proper Evaluation and Purchase Based on TOC is Preferred Method

Developing Markets for High Efficiency Amorphous Metal-Based Distribution Transformers In United States Addressing Regulatory Barriers

Efficiency Landscape in the USA

Efficiency is the cost-effective elimination of waste. The question is how to share the benefits In the case of electric losses, potential financial net-benefits are large and include additional benefits of: lower fossil fuel consumption increased environmental quality reduced and delayed need for additional generation Private ownership (with public regulation) creates a conflict between consumers and stockholders (IOUs) efficiency benefits flow largely to customers utilities can invest in higher return opportunities compared to more efficient transformers

Investor Owned Utilities (IOUs) Sell > 60% of Electricity to US Consumers

Efficiency: Potential Benefits

US Department of Energy determined that total transformer losses could be reduced by more than 40% compared to standards in effect in 2010, based on actual deliveries by manufacturers. (1)

The net present value of the additional fuel cost savings (net of transformer cost increases) was approximately $4 billion (1)
From the perspective of new demand, the cost of reducing losses is a small fraction of the cost of building new generation and transmission From the perspective of reduced demand for fossil fuels, the cost of reducing losses is less than the additional cost of renewable generation
(1) These benefits do not include employment increases from increased material demand ANY public benefits including air quality, reduced pressure on fuel prices, or reduced or delayed demand for new generation

From an Overall Economic Perspective it Makes Sense to Take Lower Cost Measures Before Higher Cost

Efficiency: Need For Standards

Question: If there are substantial private financial savings, why are mandatory minimum efficiency standards necessary?

Answer There is a divergence in the interests of consumers of electricity and the utilities that make the efficiency investment decision. In all but 3 local jurisdictions, regulation does not address efficiency.
Efficiency benefits are largely fuel savings which flow through to customers (FAC). The utilitys benefit is its allowed rate of return applied to the differential efficiency investment. Since 1992, US IOUs have been allowed to invest profits in unregulated activities where the return is substantially higher. Duty to stockholders requires utilities to avoid efficiency investment.

Interestingly, in state-owned utilities, where the divergence of interests does not exist, high-efficiency amorphous transformers are often popular as the local government attempts to minimize its overall budget cost of providing service.
IOUs Can Make Higher Returns for Stockholders in Unregulated Investments Compared to Efficiency Investments

Evidence of Divergence of Interests

In 1996, Oak Ridge National Lab estimated that 90% of US Utilities purchased liquid filled distribution transformers based on loss evaluation (TOC) In 2010, US Dept of Energy (DoE), based on input from transformer makers, estimated that this number had decreased dramatically and assumed that only 10% of utilities purchase based on loss evaluation This drop may be have been caused, in part, by the change in 1992 change which allowed the IOUs to invest regulatory earnings in non-regulated businesses at higher returns Other Factors such as the Fuel Adjustment Clause (FAC) may also continue to contribute to the reduction of evaluators. FAC gives efficiency benefits to consumers, not the utilities that purchase the transformers. Utilities' fuel cost decreases due to the use of more efficient transformers, are passed through to customers without need for a general rate proceeding; efficiency investments (that reduce costs) require a general rate proceeding TOC Use is Dropping Due, in Part, to Regulation Change and FAC; Inefficiency Costs (Transformer Losses) Do Not Cost Utility Anything Due to FAC

Addressing the Barriers

Some states/districts (Vermont, Maryland and Washington DC) address this problem by mandating investments be made on a least life-cycle cost basis (like TOC). Another solution is to create an efficiency-focused investment procurement process that: (1) allows both ratepayers and stockholders to share equitably in the efficiency gains; and (2) puts fuel cost recovery and efficiency investment cost recovery on an equal footing. Such a system would be novel and innovative in the world of utility rate regulation and would encourage efficiency and cost-effective environmental responsibility. Although there are a number of ways to approach the development of such a process, the most effective would be to encourage the state regulatory commissions to develop the process jointly with stake-holders including the utilities, national efficiency advocates and Commission Staff. States Utility Regulators Need to Address These Structural Barriers

Thank You
Metglas Inc.
David W. Millure
Sr. Vice President Sales and Marketing 440 Allied Drive, Conway SC 29526 USA E-mail dave.millure@metglas.com

Visit us on the web at Metglas.com

Backup

How Amorphous Metal is Made

Liquid metal Furnace Reservoir In-line Process Control Amorphous ribbon In-line winding

Nozzle

Melt Spinning Process for METGLAS

Core / Coil Assembly

Amorphous Metal Distribution Transformer (AMDT) Construction

What an AM Core Looks Like

Over Lap Joint

Finished Core

Oil Vent

Protecting Epoxy Resin Coat

AMDT Core Structure

History of AMTs in US Market

1970s : Product Development

1973 - Discovery of METGLAS amorphous alloy announced 1978 - Transformer core alloy developed & introduced 1979 - Pilot continuous casting line installed at Morristown, NJ, USA

1980s : Process Development

1990s : Commercial Operation

1982 - Installed first commercial transformers in USA 1989 - Commenced production of transformer core alloy in Conway SC, USA Mid 1990s Wide market acceptance of Amorphous Metal transformers (AMT)

Late 1990s Early 2000s Change of Utility Regulations remove incentive to spend extra money on energy efficient transformers 2007 US Department of Energy enacts MEPS for 2010; Expect an even higher standard in 2016

Late 2000s US market returns for AMT

Barriers to Efficiency in US Market

Utilities can invest in higher return opportunities compared to more efficient transformers (PUHCA law change 1992). Benefits of efficiency investment flow largely to ratepayers. Stockholders get only the allowed return (if earned) on the increased investment cost. This return is less than what the utility can obtain for its stockholders in unregulated businesses For Dry-type transformers, current TP1 regulation allows for purchase of inefficient transformers. Also, end-user, who would enjoy benefits of more efficient electricity distribution, does not buy the transformer

Serious Structural Barriers to Efficiency Investment in the US

Definitions

Where: FC = first cost of acquiring the transformer, including purchase price and installation cost; A = the no-load loss valuation parameter in dollars per watt ($/W); NLL = the no-load loss at nameplate load (W); B = the load loss valuation parameter ($/W); and LL = the load loss at nameplate load (W).

Where: FC = the first cost; n = the index for the year of operation (yr); Lifetime = the service life of the transformer; OCn = the operating cost in year n, including the value of the losses and maintenance costs; and Drate = the discount rate applied to the calculation (%).

Need to Add Environment Costs to TOC Calculations